City round-up: Rathbones

Rathbones, the wealth management group with a key base in the Port of Liverpool Building, suffered a 32.5% fall in annual pre-tax profits, it revealed today.

In the year to December 31, 2022, the group reported a 4.6% increase in operating income of £455.9m, but saw pre-tax profits fall from £95m to £64.1m.

Total FUMA (funds under management and administration) was £60.2bn, down 11.6% from the previous year.

They included £45.1bn in Investment Management, £11bn in Rathbone Funds, down 15.3%, and £4.1bn of Saunderson House FUMA, down 16.3%.

The board recommends a final dividend of 56p for 2022 (2021: 54p), making a total of 84p for the year (2021: 81p), an increase of 3.7% on 2021. It said this is consistent with its progressive policy and is supported by its strong capital position and robust balance sheet.

Chief executive, Paul Stockton, said: “The UK wealth and asset management sector remains fundamentally attractive, underpinned by long term trends. The strong progress we have made this year to develop our investment and financial planning services is part of our ongoing investment to improve client experience and promote efficiency.

“Our financial results reflect the difficult market conditions faced by many investors in 2022, but also the very deliberate investment in technology we have committed to, which will provide critical support to the delivery of the personal service we offer and improve our investment capability.

“Throughout the year, we remained focused on providing consistency and reassurance to our clients, to help them achieve their financial goals.”

Rae Maile, an analyst with investment bank Panmure Gordon, said: “Recent results from across the wealth management sector have been characterised by higher-than-expected levels of interest income, both on client cash deposits but also on companies’ own balance sheet resources.

“Interestingly Rathbones’ own results today are ‘in line’ with estimates at a group level, while divisionally the results were rather better in Unit Trusts (on lower variable pay) and worse in Investment Management (on higher costs).

“In part perhaps this is because of tighter and earlier guidance on rates, partly because customers benefitted more than the company. The company continues to expect operating margins to recover after an extended period of ‘investment’ but the market may remain a little more cautious in believing that.”

Original article here: https://www.thebusinessdesk.com/northwest/news/2110899-city-round-up-nichols-rathbones-manchester-building-society-accrol

Author: Neil Hodgson, Business Reporter, The BusinessDesk.com

Rae Maile

Managing Director, Research Analyst, Financials & Tobacco